Bargain Hunting in Today's Market
"You make most of your money in a bear market. You just don't realize it at the time." – Shelby Davis

Jan Franklin
President, LFCU
Financial Services Inc.
Financial Consultant

Jan Franklin, President of LFCU's Investment Division, will answer this quarter's investment question.

Q: The market is quite bearish these days. Is it a good time to hunt for deals?

A: You won't see a "Clearance" sign on Wall Street, but today's bear market offers plenty of bargains for investors with a long timeline and high risk tolerance. Historically, the long-term direction of the stock market has been up,* which means even the biggest drops were eventually followed by a rise. For example, bargain hunters who swooped in after the 22.1% drop in the markets in 2002 were rewarded with a 28.7% return the following year.**

Current low prices across many industries have created some rare opportunities for growth. The following guidelines may help you score a great deal and avoid buyer's remorse.

Bear in Mind
Consider your overall strategy. A good deal can be hard to pass up, especially in the heat of the moment. So it's important to think practically, as you would when clothes shopping: Even a $2 sweater is a waste of money if you'll never wear it. If an investment doesn't fit with your goals, timeline and risk tolerance, it doesn't fit in your portfolio.

Think long-term. While every previous bear market has eventually turned around and delivered positive returns, there are no guarantees in investing.*

Stocks you buy "on sale" today may take years to bounce back, so a buy-and-hold strategy can help you ride out the volatility.

Buy regularly. It can be downright depressing to see a stock for which you paid $70 a share now trading at $10, but using dollar-cost averaging may help calm your emotions. This technique allows you to invest a fixed amount regularly regardless of market ups and downs, which helps you buy more shares when prices are low and fewer when prices are high.* While this approach can't guarantee a profit or protect against loss in a declining market, it may help you manage risk, maintain discipline and fight the urge to time the markets.***

Diversify. Although it does not protect against loss, spreading your funds among several types of investments can help you reduce risk, regardless of what the market is doing. Because different industries and sectors of the market react to events differently, diversifying your portfolio may help you manage volatility while maintaining the potential for growth.

If you're considering bargain-hunting in today's bear market, consider talking with an investment professional. We can review your portfolio and help you make objective decisions about investments. Give us a call today at (800) 553-3707.